CREDAI alleges cement price cartelisation again, plans to move CCI

CREDAI is planning to file the case because of the alleged undue increase in cement prices from Rs 190 to Rs 300 per bag in last four months and delay in delivery. The body is also planning to write a letter to the PMOSanu Sandilya | ETRealty | July 01, 2016, 14:13 IST

NEW DELHI: About nine months after moving to CCI against cement price cartelisation, builder body Confederation of Real Estate Developer's Associations of India's western UP chapter is considering filing another similar case with the competition watchdog.

CREDAI is planning to file the case because of the alleged undue increase in cement prices from Rs 190 to Rs 300 per bag in last four months and delay in delivery. The body is also planning to write a letter to the PMO.

“In every 10 to 15 days they (cement manufacturers) are unduly increasing the rates of cement by Rs 20 to 25," said Suresh Garg, secretary of the Western UP chapter of CREDAI. "We will surely move to CCI within 15 days if the prices are not reduced. We will also write a letter to the PM office for this," he said.

CREDAI also alleged that cement manufacturers are creating a false shortage of cement in the market by cutting production. "Another setback is the decision of the cement companies to cut production by up to 70% at a time when developers hard pressed to deliver projects on time. There seems to be no grounds for restricting supply, which is adversely affecting the construction work," Garg said in a statement.

The builders' body had moved the competition watchdog Competition Commission of India (CCI) against cement manufacturers, accusing them of cartelisation in October last year. The body's NCR chapter had also stop the procurement of cement from Ultratech and Lafarge, alleging that the firms are indulged in cartelisation and malpractices. However, the ban was later removed when the companies reduced their cement prices.

These allegations come at a time when the cost required to produce per tonne of cement fell by 8.6% to Rs 3,517 year-on-year in the March quarter due to lower prices of pet coke and coal, which are major raw materials needed to manufacture cement, according to a recent report by Kotak Institutional Equities and IDFC.

Credai NCR is one of the largest chapters of the organisation comprising about 220 members from Delhi, Noida, Yamuna Expressway, Gurgaon, Ghaziabad, Rajnagar Extention, Faridabad Neemrana, Bhiwadi and other adjoining areas.

This is not the first instance of realtors alleging cartelization against cement companies. The Builders' Association of India (BAI) had filed a complaint with the CCI in 2010 against 10 top cement manufacturers and the Cement Manufacturers' Association (CMA).

The competition commission had imposed a penalty of Rs 6,300 crore on these cement companies in June 2012. The Competition Appellate Tribunal (Compat) stayed the order in 2013, but asked the companies to deposit 10% of the amount till the time their appeal is pending. The case is still going on.